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- GDP (PPP):
- $2.4 billion
- 4.4% growth
- 4.9% 5-year compound annual growth
- $26,277 per capita
- Inflation (CPI):
- FDI Inflow:
Reforms of the Seychelles economy’s evolving entrepreneurial framework have focused on improving overall regulatory efficiency. The government has previously implemented major tax reforms, cutting and simplifying personal and corporate taxes. Although privatization has been slow, efforts to enhance transparency and improve the governance of state-owned enterprises have continued. Additional regulatory reform will be critical to improving competitiveness.
Undermining the gains from an improved regulatory environment, however, is a lack of commitment to open-market policies that continues to hold back dynamic growth in trade and investment. Institutional weaknesses stemming from an inefficient legal framework and pervasive corruption severely hamper the emergence of a dynamic private sector beyond the tourism sector.
The Seychelles People’s Progressive Front, now known as the People’s Party, has ruled the archipelago country of Seychelles since 1977 when France-Albert René seized power in a bloodless coup. In 2004, René ceded power to Vice President James Michel. Michel was elected to five-year terms in 2006, 2011, and 2015 after a runoff vote. In October 2016, President Michel resigned and transferred power to Vice President Danny Faure, who will serve the remaining four years of Michel’s term. Seychelles enjoys a relatively stable economic environment with lucrative fishing and tourism industries. In July 2015, the World Bank classified Seychelles as a “high income” country.
The courts enforce interests in real property, including mortgages and liens. The World Bank’s 2016 Doing Business survey ranked Seychelles 67th out of 189 countries in its Registering Property index. The judicial branch is independent, but well-connected individuals are perceived as receiving special treatment in the courts. A lack of transparency enables corruption in privatization and other government programs.
The personal income tax rate is a flat 15 percent. The top corporate tax rate is 33 percent. Other taxes include an interest tax, a vehicle tax, and a value-added tax. The overall tax burden equals 28.4 percent of total domestic income. Government spending has amounted to 34.7 percent of total output (GDP) over the past three years, and budget surpluses have averaged 2.0 percent of GDP. Public debt is equivalent to 68.1 percent of GDP.
The regulatory framework still includes considerable bureaucratic and procedural hurdles for potential entrepreneurs. The formal labor market is not fully developed, and the inefficient public sector accounts for approximately 40 percent of total employment. The state-owned airline added new destinations in 2015 despite large operating losses, and Seychelles Public Transport Corporation recorded losses in 2015 despite a government subsidy.
Trade is extremely important to the Seychelles economy; the value of exports and imports taken together equals 181 percent of GDP. Seychelles joined the World Trade Organization in 2015. Foreign investment in some sectors of the economy is restricted. The banking sector consists of both state-owned and foreign financial institutions. Limited financing options for the private sector undermine business development.